Leasing News is a web site that posts information, news, and entertainment for the commercial leasing and finance industry. The News Edition is updated Monday, Wednesday and Friday.
Monday, June 27, 2011
######## surrounding the article denotes it is a “press release” and was not written by Leasing News nor information verified, but from the source noted. When an article is signed by the writer, it is considered a “by line.” It reflects the opinion and research of the writer. It is considered “bias” as it is the writer’s viewpoint.
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Emily Fitzpatrick---Career Crossroad
This is the start of a weekly feature that may sound like it is about jobs, but it is about "careers" --- The part of our lives that we aspire to and sustains us---and yes, sometimes disappoints us.
While many have prevailed over layoffs, bankruptcies, and "comp" reductions, this feature will attempt to answer questions to the difficult questions regarding your career.
You may submit your questions or inquiries to me, and if you do not want to be identified as to the person asking the question, let me know and it will be kept confidential:
Bank Beat---48 Banks Closed First Part of 2011
The 14th bank to fail in George this year brings bank failures up to 48 approaching the first six months of 2011. The bank was the 65th since the 2008 financial crisis. Normally banks are closed on Fridays, and this Friday being July 1st the start of a long holiday, it is unlikely there will be any then, as well it will be the start of the second part of the year.
140 banks were closed in 2009, 157 banks in 2010, and if the trend continues, this may be signs of a recovery. However, in writing Bank Beat since September, 2008, using the FDIC financial records, it indicates banks have had problems for at least three year and a half years, and some, particularly Florida, four years. This small bank is a good example of the programs community and regional banks have been experiencing.
The two branches of Mountain Heritage Bank, Clayton, Georgia were closed with First American Bank and Trust Company, Athens, Georgia to assume all the deposits. The bank was founded November 10, 2003 originally in Clayton then opened up an office in 2008 in Dillard. It has 20 full time employees when it was closed.
As of March 31, 2011, Mountain Heritage Bank had approximately $103.7 million in total assets and $89.6 million in total deposits. In addition to assuming all of the deposits of the failed bank, First American Bank and Trust Company agreed to purchase essentially all of the assets.
As you will note below the banks problems began in 2008 and were quite obvious by year-end 2009.
(in millions, unless otherwise noted)
In August of the 2009, the bank had received a Cease and Desist Order by the FDIC, which according to the Clayton Tribune, received this reaction from Mountain Heritage President Jim Wallis:
“That just means we have to do a lot more reporting to the government. Several other banks around here have the same thing.”
The reaction perhaps was typical about “banking regulations” and wanting less “interference.” He may have been right about other banks in the area having the same problems, as all of the state was particularly hit hard being overextended in land and construction loans. Georgia represents 30% of all the bank failures in the U.S. for 2011.
Wallis graduated Mississippi State University with a degree in accounting, 1970, and the was a partner for 15 years, 5 months KPMG Accounting (June,1979-October, 1985), then Executive Vice President and Chief Financial Officer for Provident Bank (September, 1995-October,1999) then joining Mountain Heritage Bank as President & CFO
As with all bank closing, all the investors in the bank lost everything they had invested.
The FDIC and First American Bank and Trust Company entered into a loss-share transaction on $69.2 million of Mountain Heritage Bank's assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $41.1 million.
Tracking Bank Failures Map:
List of Bank Failures:
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Operation Lease Fleece---Update
November 7, 2007, the FBI investigation dubbed "Operation Lease Fleece" indicted over 23 in their roles in a fraud scheme that allegedly caused more than $20 million in losses to several lending institutions that believed they were financing equipment leases. Many were disguised "sale/leasebacks" or leases that exceeded the "soft costs" such as software and installation. Many were on ghost equipment. Adam Zuckerman told Leasing News he set up phony bank accounts, trade references, fake vendors, knew how to fool site inspections, and existed before the days of Lease Police. He was taught this, he said, by Jim Raeder and Mark McQuitty, after they leased space in his building, and then when there were disagreements on commissions, he basically went on his own, as he thought this was a common practice, and even got an opinion from an Equipment Leasing and Finance Association recommended attorney (well-known in the industry) that it was "okay." Leasing News in a previous story printed an email from the attorney and had two parts of a series on Zuckerman printed until Leasing News was told authorities did not want further publication involving almost three months of interviews with Zuckerman published and Leasing News complied with the request.
It seems McQuitty and Raeder allegedly brought leases from their main business to this "group," and also started generating leads through fax marketing for working capital loans using equipment that originally existed, and then later, was more than inflated, did not exist at all.
The press release issued by the United States Attorney's Office Central District of California:
“The charges are a result of an FBI investigation dubbed Operation Lease Fleece, which targeted individuals in the equipment-leasing industry, including loan brokers, equipment vendors and an employee of CitiCapital.
“Some of the defendants – through companies called CapitalWerks in Santa Ana, Brickbanc Capital in Costa Mesa and others – marketed cash loans to small businesses experiencing credit problems. Once small businesses agreed to apply for loans, some of the defendants instead submitted equipment-lease applications to lenders. The equipment-lease applications, which were inflated so that the defendants could obtain lucrative “commissions” for themselves, were submitted along with false invoices that purported to document the sale of computer equipment to the small businesses. The defendants submitted the fraudulent equipment-lease applications because the qualifying criteria were less stringent than for a cash loan. After the lending institutions approved financing for the equipment leases, the proceeds were not used to purchase equipment as promised to the lenders. Instead, the money was used to make improper cash loans to the small businesses and to pay lucrative commissions to employees at CapitalWerks, Brickbanc and the other companies. Hundreds of bogus equipment-lease packages with fake invoices were presented to financial institutions.
“The FBI was assisted in their investigation by Citicapital, the leasing division of Citibank, which suffered an estimated $9.5 million in losses and discovered that one of their employees had perpetuated the fraud. Other victim-institutions include Wells Fargo Bank, GE Capital, American Enterprise Leasing, Key Bank, Bank of America and U.S. Bank. Investigators estimate that the victims suffered at least $20 million in losses.”
There have been other indictments since the first 23; almost all have turned evidence with a "guilty plea" except for what appears to be a key case the US Attorney and FBI want to try. No one has directly stated this, but in interviews with many of those named as well as law enforcement officials not directly connected to the case, it appears sealed cases of information are to be sealed until their trial, with some cases actually "closed."
Chant Vartanian and Sarkis Vartanian trial continued to October 18th, 2011. It appears to be the main one, although there may be other indictments, but the FBI and US Attorney General's office has no comment, public or private.
Shant (Chant) Vartanian, president of ISystems Technology and Solutions, 3650 East Olympic Boulevard, Los Angeles, California, and his brother, Sarkus Vartanian, Vice-President, Marketing are reportedly still in business, as well as working with several Southern California leasing companies. One company allegedly working with the Vartanian brothers is owned by the top salesman for CapitalWerks for five years, now a CLP and National Association of Leasing Broker’s Best Practice Broker. Previous requests for a comment or statements have not been issued.
Alphabetically these are the alleged top shearers and their sentencing dates (states are primarily California unless otherwise indicated):
Mark McQuitty, 50, of CapitalWerks/Preferred Lease of Trabuco Canyon sentencing date continued to August 22, 2011 (allowed to travel to New Zealand, where he was born and raised) from 4/16-5/16/2011.
Jim Raeder, 46, of CapitalWerks/Preferred Lease, formerly Mission Viejo, now living in Colorado, sentencing set for September 26, 2011. A condition of pretrial release was issued "...(a) do not use alcohol; (b) submit to drug and/or alcohol testing and outpatient treatment as directed by Pretrial Services; and (c) Comply with all conditions of probation for defendant's State of Colorado case."
Adam Zuckerman, 41, of BrickBanc, Laguna Beach sentencing set for October 24, 2011. He has been involved in other investment controversies, in which he has reportedly prevailed.
These are changes in sentencing, chronologically, of those named:
Brian Sime, 33, BrickBanc, Irvine also known as Joe Turner also known as Tonga sentencing continued until July 25, 2011
Leigh Dorand, 42, Tech Capital, Phoenix, Arizona sentencing continued until August 1, 2011.
Paul Arnold, 60, Brickbanc, Laguna Hills sentencing sent for August 1, 2011.
George Simon, 42, Advantage IT Solutions, Redondo Beach, sentencing sent for August 1, 2011.
Kirk A. McMahan, 35, Brickbanc, Newport Beach sentencing continued until August 29, 2011.
Jeffrey Greenough, 52, Peniche, Laguna Beach sentencing continued to September 19, 2011.
Troy Worrell, 51, Peniche, Newport Beach, sentencing continued until September 19, 2011.
Geoffrey Silver, 39, of Silver Industries, Calabasas, sentencing continued until October 17, 2011.
Chance Nell Weaver, Axis Communications, Tarzana sentencing continued to October 31, 2011.
Michael Scott Grayson, Axis Communication, Tarzana sentencing continued to October 31, 2011.
Michard Norris, 60, CapitalWerks/Preferred Lease, Los Angeles, sentencing sent for November 14, 2011.
Les Spitzer, 64, Pyramid Infinite, Grenada Hills, also known as Guy Amsalem continued until November 21, 2011.
Alphabetically, these people have already been sentenced:
James H Breedlove, 55, Santé Fe Equipment, Newport Beach: “12 months and 1 day imprisonment, with credit for time served. Pay $100 special assessment. Pay total restitution of $391,976.25. The defendant shall be held jointly and severally liable with convicted co-participants Mark McQuitty (Docket No. SACR 07-00236-CJC) and James Raeder (Docket No. SACR 07-00237-CJC) for the full amount of restitution ordered in this judgment. Interest on restitution ordered waived. 3 years supervised release under terms and conditions of US Probation Office and General Orders 318 and 01-05.”
Mark Castleman, 51, Industrial Information Systems, Chino Hills, indicted for mail fraud and November 19, 2008 pled guilty. “April 23, 2009. Hearing held before Judge Cormac J. Carney as to Defendant Mark P Castleman. Defendant Mark P Castleman (1), Count(s) 1, 1 day imprisonment, with credit for time served. Pay $100 special assessment. All fines are waived. 3 years supervised release under terms and conditions of US Probation Office and General Order 318. Bond Exonerated. Sixty (60) hours of community service with the first six months.
Douglas Cox, 42, CapialWerks/Preferred Lease, Rancho Santa Margarita, placed on probation for 1 year under terms and conditions of US Probation Office and General Orders 318 and 01-05. Pay $100 special assessment
Harold Gold, 79, Leasing Services, Falmouth, Massachusetts, placed on probation for two years under terms and conditions of US Probation Office and General Orders 318 and 01-05. Pay $100 special assessment.
Lourey McComber, 57, Prescott Valley, Arizona, Peniche, appears to have had a medical problem, and last entry shows a Government motion to dismiss information without prejudice and signed by Judge Cormac J. Carney. There appears to be another entry made in Yuma, Arizona that was terminated.
Nohad Mousa, 44, Saut Wa Soora, Inc., Anaheim, pled guilty to 18:1341 MAIL FRAUD before Judge Cormac J. Carney. “JUDGMENT AND COMMITMENT by Judge Cormac J. Carney as to Defendant Nohad Mousa (1), Count(s) 1, 6 months imprisonment, time served. Pay $100 special assessment. Pay total restitution of $94,775. Interest on restitution ordered waived. Defendant shall be held jointly and severally liable with co-participant George Simon (Docket No 8:07CR00246) for the amount of restitution ordered in this judgment. All fines are waived. 3 years supervised release under terms and conditions of US Probation Office and General Orders 318 and 01-05. Signed by Judge Cormac J. Carney. “
Leo J. Najera, 64, ECCI, Mission Vallejo, July 20th JUDGMENT AND COMMITMENT by Judge Cormac J. Carney as to Defendant Leo J Najera (1), Count(s) 1, Defendant is sentenced to 1 day imprisonment, which the Court determines has been served. Pay $100 special assessment. Pay total restitution of $396,251.22. The defendant shall be held jointly and severally liable with convicted co-participants Mark McQuitty (Docket No SACR 07-236-CJC) and James Raeder (Docket No SACR 07-237-CJC) for the full amount of restitution ordered in this judgment. Interest on restitution ordered waived. Placed on supervised release for 3 years under terms and conditions of US Probation Office and General Orders 318 and 01-05.
Anthony E. Watson, 65, CapitalWerks/Preferred Lease, Los Angeles, pled guilty before Judge Cormac J. Carney. 1 day imprisonment with credit for time served. Pay $100 special assessment. All fines are waived. 3 years supervised release under terms and conditions of US Probation Office and General Orders 05-02 and 01-05. (mt)
John J. Callaghan, 38, of Warminster, Pennsylvania, who worked at Citicapital, one of first 23 indicted, no record found.
John Budge, 38, of Sartell, Minnesota, who worked at Bach Business Credit, one of first 23 indicted, no record found.
Note: This list may not be complete as information gathered came from many different sources, including the original US Attorney Press Release. Ages also may not be correct, but are estimated from the original date of filings.
Indictment of Chance Nell Weaver showing how the scheme worked
Grand July October, 2007 Indictment of Michael Scott Grayson (Citibank connection)
Previous Operation Lease Fleece Stories:
Searching for Reasons to Lease
“If” the accounting rules change in the near future what is going to compel the equipment customer to lease? If “off balance sheet” is gone and expensing the rents dies with operating leasing ---why lease? Do you have a good sales pitch or are you just going to offer 100% financing with level payments and $1 purchase option? Do you have a planed approach or just hope to convince a vendor to throw business your way because he likes you!
Commercial equipment leasing is different than equipment financing primarily because of the way we approach our product. We focus on the equipment and the way the customer plans to use it. We ask questions that lead the customer in the direction that favors leasing! Questions that help determine what lease program serves his cash flow the best, like irregular payments, termination on a specific month, skip payments, stepped up or stepped down payments or longer terms or convenience or just plain leaving their existing credit for working capital. Residuals are a big factor in adjusting payments to meet a budget or financial projections on middle size and large leases.
The more you know about the equipment and the customer’s needs the better your lease program will be. If you have a deal over $100,000 then you need to complete an equipment use and description form to make sure you have all the facts. If you do not have this form email me and I will send you one.
Reasons to lease is a misnomer because if you ask the correct questions a lease will look a lot better than conventional financing. If you create a lease that covers all the aspects of the answers to these questions you will be way ahead of your competition if all they offer is level payments and a low rate. There are a lot of reasons to lease that are more important than rate.
You should have a crib card with a list of questions to make sure you have covered everything to make sure you know the complete picture. This crib card should fit neatly on your person so you can refer to it during your call. Here are some suggestions, and you should put them in the order that meets your client’s business or industry or use of the equipment being considered.
If the list is too long, then customize it, but here are the questions you should be aware to make your reasons why your customers should lease:
1. Month and year for end of term
a. Replacement or addition
I could go on and on with the information needed but you get the picture.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty-five years and can be reached at firstname.lastname@example.org or 502-649-0448
He invites your questions and queries.
Previous #102 Columns:
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Top Stories---June 20--June 24
Here are the top ten stories opened by readers:
(1) LEAF Investor asks what should he do
(3) C&J Leasing Convicted $8 million Lease Discount Scheme
(4) Hospital Report with CaringBridge Connection
(5) Navitas Lease Corp. Not Licensed in California
(6) Leasing 102 by Mr. Terry Winders, CLP
(7) Feds Seize $404 Million from Deutsche Bank
(8) Automatic Renewals: The States Respond by Barry Marks, Esq.
(9) California Licenses and Checking Them
(Tie) (10) Bank Deal Could Put PNC in Sweet Spot
(Tie) (10) Susquehanna to buy 1N Bank parent company
Leasing Association 2011 Conferences
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NEFA Conference Attendees Why You Should Attend 3:25
The 50th Anniversary Convention promises to be "the largest meeting of the equipment leasing and finance sector---Whoever you need to see is likely to be there!"
ELFA is now accepting proposals from those interesting in making a presentation
April 26-28, 2012
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Long Island, New York-- Adopt-a-Dog
Breed: Yellow Labrador Retriever
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This pet is up to date with routine shots.
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This Day in American History
1564-the first painting of an American scene by a European painter was painted near what is now St. Augustine, FL, by Jacques Le Moyne de Morgues, a cartographer who accompanied the French Huguenot expedition to Florida under Rene Goulaine de Laudonniere. The work, title, “ Laudonnierus et Rex Athore ante Columnan a Praefecto Prima Navigattione Locatam Quamque Venerantur Floridenses, was painted in gouache and metallic pigments on vellum. It shows Laudonniere being welcomed by a party of Native Americans led by Chief Athore.
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